Business in A Global Environment

Part 1
Business in a
Global
Environment
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 2
Business Ethics
and Social
Responsibility
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Explain the concepts of business ethics and social
responsibility.
2. Describe the factors that influence business ethics.
3. List the stages in the development of ethical standards.
4. Identify common ethical dilemmas in the workplace.
5. Discuss how organizations shape ethical behavior.
6. Describe how businesses’ social responsibility is
measured.
7. Summarize the responsibilities of business to the general
public, customers, and employees.
8. Explain why investors and the financial community are
concerned with business ethics and social responsibility.
2-3 Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Concern for Ethical and Societal Issues
 Business ethics—standards of business conduct
and moral values regarding right and wrong
actions in the work environment.
Constituencies to which businesses are
responsible:
The New Ethical Environment
 Individuals make a
difference
 Development of
individual ethics
Stages of Moral and
Ethical Development
The New Ethical Environment
 Common Business
Ethical Challenges
 On-the-Job Ethical Dilemmas
Conflict of Interest—situation in which a
business decision may be influenced for
personal gain.
Honesty and Integrity—telling the truth

and adhering to deeply felt ethical
principles in business decisions.
 On-the-Job Ethical Dilemmas
Loyalty vs. Truth—businesspeople expect
their employees to be loyal and truthful.
But ethical conflicts may arise.
Whistleblowing—employee’s disclosure
to government authorities or the media of
illegal, immoral, or unethical practices in
the organization.
How Organizations Shape Ethical Conduct
 Structure of an Ethical Environment
 Ethical Awareness
Code of Conduct—a formal statement
that defines how the organization expects
and requires employees to resolve ethical
questions.
 Ethical Reasoning
Codes of conduct cannot detail a solution
for every ethical situation. So corporations
provide training in ethical reasoning.
 Ethical Action
Helping employees recognize and reason
through ethical problems and turning them
into ethical actions.
 Ethical Leadership
Executives must demonstrate ethical
behavior in their actions.
Acting Responsibly to Satisfy Society
 Social Responsibility—management’s
acceptance of the obligation to consider profit,
consumer satisfaction, and societal well-being
of equal value in evaluating the firm’s
performance.
Social Audits—formal procedures that
identify and evaluate all company activities
relate to social issues such as conservation,
employment practices, environmental
protection, and philanthropy.
Acting Responsibly to Satisfy Society
 Responsibilities
of Business
 Responsibilities to the General Public
Public Health Issues
Protecting the Environment
 Recycling—reprocessing of used
materials for reuse.
 Green marketing—marketing strategy
that promotes environmentally safe
products and production methods.
 FTC Guidelines for Environmental Claims in
Green Marketing
Developing the Quality of the Workforce
Corporate Philanthropy—act of an
organization giving something back to the
communities in which it earns profits.
 Responsibilities to Customers
Consumerism—public demand that a
business consider the wants and needs of its
customers in making decisions.
 Right to Be Safe
Consumers should feel assured that what they
purchase will not harm them in normal use
 Product Liability
 Right to Be Informed
Consumers should have enough access to
education and product information to make
responsible buying decisions
 Wacky Warning Labels
 The Right to Choose
To select which goods and services they
want and need to purchase
 The Right to Be Heard

Should be able to express legitimate
complaints to appropriate parties
 Responsibilities to Employees
Workplace Safety.
Quality of Life Issues.
Ensuring Equal Opportunity in the Job.
Age Discrimination.
Sexual Harrassment and Sexism—
inappropriate actions of a sexual nature in
the workplace.
 Rates of Workplace Injuries and Illnesses
 Laws Designed to Ensure Equal Opportunity
 Laws Designed to Ensure Equal Opportunity
 Responsibilities to Investors and the
Financial Community
Fundamental goal of any business is to
make a profit.
Investors and the financial community
demand that businesses behave ethically
as well as legally.
Requirements for Ethical Environment
Compliance standards and procedures.
Establish standards and procedures, such as codes of
ethics and identification of areas of risk, capable of
reducing misconduct or criminal activities.
 High-level personnel responsibility.
Assign high-level personnel, such as boards of directors
and top executives, the overall responsibility to actively
lead and oversee ethics compliance programs.
• Appropriate responses to the
offense.
Take reasonable steps to respond to the
offense and to prevent and detect
further violations.
• Self-reporting.
Report misconduct to the appropriate
government agency.
 • Applicable industry practice or
standards.
Follow government regulations and industry
standards.
 Establishment of monitoring and auditing
systems and reporting system.
Monitor and review ethical compliance systems,
and establish a reporting system employees
can use to notify the organization of
misconduct without fear of retribution.
 Enforcement of standards through
appropriate mechanisms.
Consistently enforce ethical codes,
including employee discipline.
 Due care in assignments.
Avoid delegating authority to individuals
with a propensity for misconduct or
illegal activities.
Communication of standards
and procedures.
Communicate ethical requirements to
high-level officials and other
employees through ethics training
programs or publications that
explain in practical terms what is
required

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Part 1

Honesty and Integrity—telling the truth

 Structure of an Ethical Environment

 The Right to Be Heard

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